Skin is an essential barrier that protects the body from infection and dehydration. It is also an important sensory organ that allows animals to perceive touch, pain, and temperature. A single layer of multipotent embryonic epidermal progenitors located in the basal layer gives rise to skin lineages: the epidermis that provides barrier function, hair follicles that are important for thermal protection, and Merkel cells that mediate mechanotransduction. While the molecular mechanisms controlling development of the epidermis and hair follicles have been extensively studied, the processes controlling Merkel cell fate determination are completely unknown. Transcriptional profiling revealed differential expression of key chromatin regulators in epidermal progenitors and Merkel cells. Among them were several subunits of the Polycomb repressor complex, which were expressed in epidermal progenitors but were downregulated in Merkel cells. Using in vivo loss-of-function studies, we uncovered that the Polycomb complex controls Merkel cell lineage development. Without Polycomb repression, differentiation is accelerated and Merkel cells are precociously acquired. To get insight into the mechanisms of Polycomb control of Merkel cell development, we have identified genes repressed by the Polycomb complex in epidermal progenitors. The most prominent among them was Sox2, which encodes a transcription factor that is highly expressed in Merkel cells. Conditional ablation of Sox2 in skin revealed a dramatic decrease in Merkel cell number, indicating the importance of Sox2 for Merkel cell development. Overall, the above-mentioned results suggest a working model wherein the Polycomb complex controls differentiation in epidermal progenitors by repressing key developmental regulators of the Merkel cell lineage, such as Sox2. The main focus of this grant is to determine the molecular mechanisms by which the Polycomb complex controls Merkel cell fate determination. In Aim1, we will analyze the significance of Polycomb-mediated Sox2 repression in control of the Merkel cell lineage. In Aim2, we will delineate how the Polycomb complex, active chromatin modifications, and components of the transcriptional machinery cooperate to regulate Sox2 gene activation during differentiation of epidermal progenitors to Merkel cells. Finally, in Aim3 we will explore the role of other chromatin regulators in control of Merkel lineage development. Indeed, transcriptional profiling revealed that aside from the Polycomb complex, five key chromatin regulators are differentially expressed in epidermal progenitors and Merkel cells. Using in vivo loss-of-function, molecular and biochemical studies, we will uncover the significance of these chromatin regulators with respect to Merkel cell development. In summary, these studies will define the role of chromatin regulators in skin development and fate determination.)